Eight telecoms operators will consider legal action if Eir rollout national broadband plan
Government told legal action would follow Eir NBP rollout
EIGHT telecoms operators have said that they will consider EU legal action if the government submits to a “tactical” attempt by Eir to derail the National Broadband Plan.
Speaking through the industry association Alto, the firms rounded on Eir, accusing the company of trying to subvert the National Broadband Plan for its own ends.
They also warn of “significant damage” to the country’s telecoms infrastructure if “the very acute and clear political pressures that are being brought to bear” were to result in Eir being handed a new rural monopoly.
“If the tactical interference in a public procurement process, grounded in State Aid law and rules, is seen to have borne fruit then we consider it will be appropriate to bring such a matter to the attention of the European Commission Directorates General Competition and Information Society for further investigation,” said the letter from Alto.
“The behaviour of a dominant player such as Eir, tacitly interfering in a social policy measure that is pro-consumer and pro-competition and recognises the need to protect the State (and taxpayers) investment could have untold reputational and distortionary market impacts if the Government decides to either pause or scrap the NBP intervention as a consequence.”
Alto was responding to Eir’s offer that if the government abandons the National Broadband Plan’s protections and regulations, it could roll out a fibre broadband network at a cheaper price than the €2.9bn subsidy outlined by the Department of Communications. The government has rejected Eir’s approach, arguing that the cost difference is smaller than Eir says and that rural householders would have less protection.
One of Eir’s requirements is that the government should drop its condition that Eir must report to it clearly where the taxpayer subsidy goes via Eir’s accounts and organisational structure.
Alto has warned that this may be amount to a licence for Eir to swallow up taxpayer funds and set up a lopsided business that shuts rivals out.
“Industry does not want, and cannot have, an NBP provider without the type of organisational governance and independent legal separation outlined in the procurement process,” the letter states. “Indeed, it would be fair to characterise this as a red line issue for industry on which the state relies so much to ensure a successful NBP achieves its objectives.”
Alto also claims that Eir is already carving out an unfair advantage in how it deals with competitors in the 300,000 rural broadband area it has almost completed.
“These include serious concerns over Eir’s failure to comply with its obligations specific to the 300K Concession area,” said the Alto letter. “The Government should take note that Eir’s own retail arm has secured as much as 85pc market share in the 300,000 [area]. This represents evidence of market failure by any objective competition analysis or assessment. Indeed, 40pc share is generally regarded as sufficient evidence of a failure in competition law assessments by the European Courts. While the reasons for this market failure must be investigated and addressed by ComReg it would be an act of pure folly to simply adopt the same model that resulted in such an outcome for the purposes of deploying NBP. It is understandable that Eir would advocate for the adoption of that approach.”
“ALTO is extremely concerned that if the Government were to further delay the process, that the NBP intervention will not only stall permanently but runs the risk that significant damage will be done to Irish telecommunications investment community observing that a process could be derailed by such a late, arbitrary, noncompliant and unsubstantiated offer from an external stakeholder whose commercial interests are probably best served by such an outcome,” the letter said. “Without prejudice to the views or position of any of our members such an outcome may also give rise to litigation. Further, the wrong decision here will create a perception that the Irish State is a soft touch when it comes to compliance with State Aid rules, competition, and public procurement rules.”
On the question of “interference” with the National Broadband Plan, an Eir spokesman said: “we’re not interfering, we were asked a question by the Oireachtas Committee. We’re a little surprised that Alto is against that type of transparency.”
The Eir spokesman added that Eir has less than 85pc retail market share among the 300,000 rural homes it has passed with fibre to the home. He declined to say what the percentage was, but said that recent signups are in line with Eir’s market share in other broadband areas outside Virgin’s cable network areas. The Eir spokesman said that Eir’s retail figure in the 300,000 zone had started higher than normal because competitors were late to start selling broadband on the network through a combination of technical reasons and a boycott related to a pricing dispute. He said that Eir expects its retail market share in the areas covered to reflect its national retail market share over time.